Almost one in three City jobs has been shed since the recession, with London
now “weaker” than at any stage during the financial crisis, according to a
new analysis.

The Centre for Economics and Business Research (CEBR) said City roles were down by almost 100,000 since the recession.

The impact of the continued Euro crisis on banks is likely to cost at least another 30,000 jobs this year, causing the think tank to cut its forecast for the total number of finance roles to an average of 255,000 this year - a 16-year low.

This is down from the 354,000 recorded in 2007 – a 28pc fall – and well below the think tank’s earlier estimate of 288,000, made six months ago.

The last time the number of City roles reached 255,000 was the first quarter of 1996.

The bulk of the City jobs cull has taken place during the last six months, the report said, with signs that the market is stabilising.

However, CEBR chief executive Douglas McWilliams said: “The combination of weak demand, aggressive regulation, high taxation and the rising competitiveness of financial centres in the Far East mean that London’s position is weaker than before. London remains the top ranked financial centre but its lead has narrowed.

“One of the consequences is that the tax revenues from the City – which did so much to finance UK public spending in the boom years – are greatly diminished and likely to stay that way.”

By 2016, the number of City jobs is likely to rise to 268,000, but this is still well below pre-recession levels, the analysis showed.

The forecast comes as a slew of other labour market reports warn the number of people getting jobs across industries is slowing as uncertainty rises.

According to the latest study from the Recruitment and Employment Confederation and KPMG, the number of people placed in permanent roles last month increased at the slowest rate since January and starting salaries have fallen amid the “fragile” jobs market.

Bernard Brown, head of business services at KPMG, said unemployment could reach 3m by the end of the year as business confidence dropped.

“We haven’t seen the bottom yet. Europe is one of our biggest trading partners and as this uncertainty continues, businesses will delay investing.”

The British Chambers of Commerce said in March it expects unemployment to grow from 2.65m currently to 2.9m by the end of 2012.

Mr Brown said: “Another 100,000 is not a significant amount, meaning we could see it reach 3m.”

Starting salaries for permanent staff have also fallen in a further sign that jobs growth will be fragile in the months ahead, the KPMG study said.

A separate report by jobs search site Monster found the number of jobs being advertised online in April fell to a six-month low, in a further sign of the fragile labour market.

London’s online job market – usually one of the best in the country – declined over the year for the first time since 2009, Monster said.

Elsewhere, a study by PricewaterhouseCoopers warned almost half of graduates working in financial services firms are looking for a new job, with many blaming the industry's reputation, which had "suffered" during the crisis.